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Napanee, Ontario | yes, doubling from 3.5 - 7% when, land prices are already predicated on that 3.5%, is indeed the same as from 9-18.
"I think it would be much easier to have rates double from 3% then it was to have the double from 9%.. There are some variable rate loans out there at 2.5% so those could actually triple. I don't think they will but nobody thought interest would go to 18% in the 80's either."
I'm on the flip side of that - it will be actually impossible for rates to double today, without the bond market disintegrating. In the 80's debt to GDP for the government was 30%. They could afford to raise rates much easier than today. Debt to GDP today is almost 110%. Rates literally cannot double or there will be a default. US government has so much of the maturities on the short end of the curve now, that each year roughly 8 trillion in maturities are rolled over. Default threshold is around 5%, and if rates move past that, there will be no bidders on the new issues - just like what happened in Greece, Italy, Spain... before the ECB stepped in. Which is exactly why the FED has done what it has.
Edited by OldMcdonald 1/23/2015 09:58
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Talked to a banker.....
